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STATE LED DEVELOPMENT IN HISTORICAL PERSPECTIVE:FROM FRIEDRICH
LIST TO A CHINESE MODE OF
GOVERNANCE?
SHAUN BRESLIN
Professor of Politics and International StudiesThe University of
Warwick, UK
Coventry CV4 7ALTel: 44 2476572558
Email:
[email protected]://www2.warwick.ac.uk/fac/soc/pais/staff/breslin
Co-editor, The Pacific
Reviewhttp://www.tandf.co.uk/journals/titles/09512748.asp
Extremely rough draft paper not for citation.
Shaun Breslin, 14 September 2009
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AbstractThe relationship between states and markets has been at
the heart of academic debatesin International Political Economy
(IPE). Indeed, it was at the heart of the creation ofa scientific
approach to political economy in the work of Adam Smith and
resultingdebates over the efficacy of free trade in generating
growth in the eighteenth andnineteenth centuries. For Friedrich
List, free trade could only work in a theoreticalcosmopolitical
world order; in the real world of competing states, free trade
hadbecome a tool used by the powerful to promote their interests,
and the less powerfulwere best served by the existence of a strong
state to guide economic developmentand protect domestic industries
until they were able to compete on an equal footing.
This paper uses the Listian critique of Smith as a means of
assessing the causes andconsequences of crisis not just the current
global crisis but also the crises that hitAsia and elsewhere in
1997. It argues that despite historical evidence of the benefitsof
state-led development, neoliberalism became an almost unchallenged
(evenunchallengeable) ideology in the West in the 1990s, resulting
in the promotion of aliberalisation agenda even though the lessons
of the 1997 crises seemed to point todifferent solutions.
The paper concludes by considering alternative development
models/theories thatmay emerge from the current crisis, with a
specific focus on whether China can act asa model for others. It
suggests that the crisis has exacerbated tensions within theChinese
mode of development that were already evident before 2008, and that
there ismuch to do to establish a sustainable development
trajectory in China itself. It alsoquestions whether the Chinese
model is distinctly Chinese in nature and whether itis transferable
to other economics in short, is it correct to talk of a Chinese
modelat all. Rather than a model, China acts as a metaphor for an
alternative the mostrecent example for others that the Listian
state-led approach has much to offer as analternative to the
neoliberal agenda.
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STATE LED DEVELOPMENT IN HISTORICAL PERSPECTIVE: FROM FRIEDRICH
LIST
TO A CHINESE MODE OF GOVERNANCE?
Introduction
Over three hundred years since Adam Smith developed the
scientific study of
political economy with the publication of what became known as
The Wealth of
Nations1, the debates over the relationship between states and
markets that inspired
Smith remain at the heart of the study of International
Political Economy (IPE).
Moreover, in the wake of the economic crises that began to shake
the world in 2008,
the relationship has once more become central in policy debates
both debates over
economic governance within individual states, and debates about
the nature of global
governance and regulation.
The argument here is that understanding some of the early
debates fired by Smiths
path breaking work has much to offer for those seeking to
understand what is going
on today. In particular, by considering Friedrich Lists
critiques of Smith and the
nature of free market capitalism2, we not only gain an insight
into the relationship
between states, markets and development, but also the
relationship between power
and the promotion of ideational orthodoxies.
By taking a longer term historical perspective, we can also
place the contemporary
Chinese developmental/governance experience in context. In
short, state-led
development instead appears to be much more mainstream (if not
dominant) in
promoting growth and development than the recent ideational
hegemony of the
1 Formally titled An Enquiry into the Nature and Causes of the
Wealth of Nations published in 1776.2 Not a term that Smith
actually used himself but one that has become widely accepted as
the modernversion of the subject of Smiths attention.
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Washington Consensus would seem to suggest. Thus, the Chinese
experience might
not be quite as peculiar or innovative as appears at first
sight. Its also not clear
whether there is a Chinese model as such something that is
identifiable, distinctly
Chinese and transferable to other settings. And notwithstanding
the impressive
bounce in 2009 as a result of government initiatives and bank
spending, nor is it
clear how the Chinese project be affected by the global crisis
in the long term.
Nevertheless China provides an important example of an
alternative to the neoliberal
project particularly as state-led alternatives seemed to have
been somewhat
undermined by the Asian crisis of 1997. And it is in this
promotion of alternatives
perhaps China as a metaphor for difference - that the China has
perhaps most to
offer in the development of new forms of governance.
This paper refers throughout to neoliberalism and the neoliberal
project, but does so
with considerable unease. All governments intervene in the
economy to some extent
or another and provide obstacles to truly free trade as the
protection afforded to
agricultural groups in Europe Japan and the USA amply
demonstrates. Indeed, one of
the core arguments in the second part of this paper is that core
states in the developed
capitalist democratic world attempt to impose levels of
liberalisation on others that
they dont tolerate at home. Even in the most free of markets,
firms themselves try to
find ways of managing the economy to work for their interests,
and the attempt to
emulate such processes has been part of those government reforms
that are often
badged as new institutionalism.3 In many respects, the term
managed
neoliberalism is more appropriate definition (even if it is
something of a
contradiction in terms). So neoliberalism is used here as a
reference to an idealised
3 Mark Bevir (2003) Narrating the British State: An Interpretive
Critique of New LaboursInstitutionalism, Review of International
Political Economy 10(3): 45580.
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type of economic preferences in those states that broadly
support the principles of the
Washington Consensus (for others at least); preferences that do
not always conform to
the actuality of economic policy and management within those
states themselves.
Ideational Hegemony
The lessons of the financial crisis seem to be clear. The speed
and extent of
liberalisation created conditions where transnationally mobile
capital could nor just
flood into developing countries, but also flood out equally
rapidly when the market
panicked. In a form of self-fulfilling vicious cycle,
perceptions of economic weakness
resulted in rating agencies downgrading whole countries, which
then prompted the
withdrawal of capital which created structural economic
weaknesses that then led to
further capital flight. Having been previously criticised for
its relative lack of
liberalisation, particularly in financial fields, China emerged
from the crisis relatively
unscathed because of this relative lack of liberalisation.4 To
be sure, export markets
were hit and the extent to which China had become over-dependent
on exports as a
source of growth came into question. But currency and financial
controls meant that
China came through the crisis relatively unscathed.
Of course, the crisis referred to here is not the 2008 (and
ongoing) variety, but the
1997 crisis in Asia.5 Yet, despite the evidence (for me at
least) apparently pointing to
the consequences of too much liberalisation, the solutions
prescribed by the
institutions of the Washington Consensus most notably the IMF
pointed instead to
the negative consequences of interference in the (free) market.
The solution was to be
4 Yu Yongding (1999) Chinas Macroeconomic Situation and Future
Prospect, World Economy andChina (2): 4-13.5 And to an extent those
in Latin America and Russia as well.
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found in the promotion of further liberalisation and the
adoption of market
fundamentals.
In considering the fallout of the 1997 crisis, it is easy to
fall into dichotomisation; on
the one side, the west enforcing its views and preferred
policies through the major
global institutions, and on the other side, the oppressed east
being subject to a new
form of western colonialism. The danger for those on the left of
the political spectrum
who seek alternatives to neoliberal capitalism is that these
alternatives are often not
built around what is best for the masses (more on this shortly).
So its important to
note that criticisms of crony capitalism are not necessarily
invalid. The relationship
between state and business in parts of Asia did indeed create
economic systems that
controlled the market to deliver surplus into the hands of the
few at the expense of the
many. So the problem here is not so much the identification of
problems, but rather
the solutions that were developed (imposed?) to remedy them.
Indeed, many in the
region suffered from the double whammy of first the
authoritarian capitalist bias of
regional states, and second the liberalising solutions imposed
in the wake of the crisis.
Nevertheless, the neoliberal prescriptions suggested and in
places imposed by the
west and the global institutions reflect the ideational
dominance of neoliberalism in
the post Cold War era. Indeed, for some the 1997 crisis marked
the highpoint of
neoliberalism as it provided an opportunity to punish the region
for departing from
the dominant model6 - having developed an erroneous form of
Asian capitalism, the
6Higgott, R. (1998) The Asian Economic Crisis: A Study in the
Politics of Resentment, New
Political Economy, 3 (3): 333-356.
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crisis allowed the west to make sure that from now on Asia would
have proper
capitalism.
Ideational hegemony and global governance
While the second section of this paper points to the promotion
of neoliberalism as a
tool for the pursuit of other ends, it is important to recognise
that the policy debates in
many western countries have become constrained by the parameters
of acceptance of
the broadly defined neoliberal (or market conforming) paradigm.
And it is particularly
notable perhaps even remarkable that this does not seem to have
been
fundamentally changed by the global crisis. Radical alternatives
are notable by their
absence from mainstream discourses, with the debates instead
focussing on how to
restore confidence in the current system, and how to make sure
that it works better in
the future.
And of course, this is not a phenomenon that is unique to the
UK. Neoliberalism has
become the dominant paradigm in not just individual states, but
also in the major
global institutions. Policy in the Bretton Woods institutions
has become dominated by
the Ten Commandments of the Washington Consensus, namely:-
1. Fiscal discipline;
2. Redirection of public expenditure toward education, health
and infrastructure
investment;
3. Tax reform - broadening the tax base and cutting marginal tax
rates;
4. Interest rates that are market determined and positive (but
moderate) in real
terms;
5. Competitive exchange rates;
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6. Trade liberalization - replacement of quantitative
restrictions with low and
uniform tariffs;
7. Openness to foreign direct investment;
8. Privatization of state enterprises;
9. Deregulation - abolition of regulations that impede entry or
restrict
competition, except or those justified on safety, environmental
and consumer
protection grounds, and prudential oversight of financial
institutions;
10. Legal security for property rights.
But it is not just in the well documented policies of the World
Bank, IMF and WTO
that these ideas dominate. Official statements from the UN
increasingly seem to
reinforce the hegemony of neoliberal economics as not so much
the best as the only
economic strategy that will deliver countries from
underdevelopment. In In Larger
Freedom Kofi Annan noted that there is an unprecedented
consensus on how to
promote global economic and social development.7 This consensus
embodied as
the 2002 Monterrey Consensus recognizes that the international
economic order
contains important structural constraints on developing
countries. Most clearly of all,
they are denied access to the most lucrative potential markets
because of the
protectionism in the developed world. So while the system is
imperfect, it is largely
because it is not liberal enough the system doesnt need
changing, rather it needs to
work correctly.
7 Kofi Annan (2005) In Larger Freedom: Towards Development,
Security and Human Rights for All(New York: United Nations): 7.
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Moreover, while the developed world needs to change, the primary
responsibility for
achieving growth and equitable development lies with developing
countries8, and is
not the fault of the international economic order. Indeed, at
the heart of this Monterrey
Consensus is a commitment to principles that have much in common
with the
Washington Consensus. In order to reduce poverty
Governments should attach priority to avoiding inflationary
distortions and
abrupt economic fluctuations that negatively affect income
distribution and
resource allocation. Along with prudent fiscal and monetary
policies, an
appropriate exchange rate regime is required.9
The Monterrey Consensus also emphasizes the importance of
private capital flows
through FDI as a means of generating development which
necessitates key policy
reforms in developing countries:
A central challenge, therefore, is to create the necessary
domestic and
international conditions to facilitate direct investment flows,
conducive to
achieving national development . To attract and enhance inflows
of
productive capital, countries need to continue their efforts to
achieve a
transparent, stable and predictable investment climate, with
proper contract
enforcement and respect for property rights, embedded in
sound
macroeconomic policies and institutions that allow businesses,
both domestic
and international, to operate efficiently and profitably and
with maximum
development impact. Special efforts are required in such
priority areas as
8 UN (2004) Unleashing Entrepreneurship: Making Business Work
for the Poor: Commission on thePrivate Sector and Development
Report To The Secretary-General Of The United Nations (New
York:United Nations): 1.9 UN (2002) Report of the International
Conference on Financing for Development (New York:United Nations):
4
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economic policy and regulatory frameworks for promoting and
protecting
investments10
The importance of policy adjustments to allow the private sector
to flourish was also
at the heart of The Commission on the Private Sector and
Developments 2004
report.11
Moreover, the channels for challenging this orthodoxy seem to be
declining at the
UN. UNCTAD once acted as a forum for developing countries
refusal from the start
to accept a universal model of development.12 To be sure, there
might not be a
consensus on what needed to be done, but there was more or less
agreement amongst
the G-77 countries that the global trading system and the
capitalist global economy
perpetuated the exploitation of poorer countries by the rich.
What this New
International Economic Order might look like was unclear, but
for this study, perhaps
more important than specific policy prescriptions was simply
that alternative models
and ideas were on the UN agenda.
But by 2004 at the latest, this position had changed. The 2004
So Paulo Consensus
effectively argued that globalisation was good, and developing
countries needed to
adapt their national strategies to fit into the existing global
liberal order to make the
most of it.13 For Taylor, this left UNCTAD in acceptance of the
hegemonic discourse
while (at best) attempting to ameliorate the worst aspects of
the established order.14
10 Ibid: 5.11 UN (2004) Unleashing Entrepreneurship, op cit.12
Kathryn Lavelle (2001) Ideas Within a Context of Power: the African
Group in an EvolvingUNCTAD The Journal of Modern African Studies 39
(1): 31.13 UNCTAD (2004) The So Paulo Consensus (New York: United
Nations).14 Ian Taylor (2003) The United Nations Conference on
Trade and Development New PoliticalEconomy, 8 (3): 412.
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The UN may not be that important as a promoter of economic and
developmental
norms when compared to the other agencies of global economic
governance.
Nevertheless, that change in the development discourse in the UN
from ideational
competition (if not conflict) to one of unanimity and consensus
is significant. For
Gosovic, the UN can be seen as promoting Global Intellectual
Hegemony designed
to influence and homogenize world public opinion.15 That it is
perhaps seen as being
more politically neutral than the Bretton Woods institutions
which are expected to
promote neoliberalism might even make this ideational
transformation even more
significant.
Neoliberalism and Ideational Hegemony: A Caveat
This brief discussion of the dominance of neoliberalism is a
caricature of reality. Like
all caricatures, it has its basis in reality, but contains
exaggerations that are designed
to show it in a specific light. But it is important to recognise
that it is an exaggeration
nonetheless.
For example, what Kofi Anan says or the UN publishes does not
reflect the
unanimous position of all member states. Neither does the
reality of what is actually
done in terms of development assistance always accord with the
neoliberal consensus
particularly when it is done by national development agencies,
and even more
particularly when it is done by NGOs.
Nor is ideational competition entirely dead. If we put the
Chinese case to one side for
a moment, the promotion of quasi-socialist alternatives by
people like Hugo Chavez
15 Branislav Gosovic (2000) Global Intellectual Hegemony and the
International DevelopmentAgenda International Social Science
Journal, 52 (166): 447-456.
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in Venezuela is a good example of emerging alternatives. Indeed,
former Costa Rican
President Jos Maria Figueres has argued that Latin America has
freed itself from the
neo-liberal dogmas that stunted growth in the region for a
decade.16 Indeed, the
architects of the Washington Consensus have rethought their
basic principles and
understandings in light of the failure to promote development in
many parts of the
world albeit to largely conclude that the right institutional
framework needs to be in
place to make the commandments work, rather than questioning
their fundamental
applicability.17 And critiquing and rejecting the Washington
Consensus has become
such an important focus of academic studies that it almost
constitutes a sub discipline
in itself.
So the hegemony of neoliberalism is not undisputed or
unchallenged. But if we look
backwards to earlier debates over the nature of the relationship
between states and
markets, then perhaps we can increase our understandings of how
and why
neoliberalism is projected in the way that it is by key states
in the global political
economy, and also suggest that it is in fact state-led projects
that historically have
been more successful in promoting development and growth than
the current
orthodoxy suggests.
The First Washington Consensus? Friedrich List and State-Led
Development
Strange Bedfellows? The Left and List
It is not hard to find historical cases of strange bedfellows
forming alliances to fight
common enemies. When my enemys enemy is my friend, then almost
anything is
possible. Witness, for example, Chinas relations with the
Pinochet regime in Chile in
16 http://go.worldbank.org/YIMSCROJO017 Pedro-Pablo Kuczynski,
John Williamson (2003) After the Washington Consensus:
RestoringGrowth and Reform in Latin America (Washington: IEE).
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the 1970s; or the numerous and shifting alliances that the UK
and USA have formed
with a variety of regimes in the Middle East. The search for
alternatives to
neoliberalism can also result in some strange alliances a form
of ideational
realpolitik. This is particularly the case for those on the left
who are seeking
alternatives to neoliberalism in the contemporary era, as the
alternatives are often
nationally based projects undertaken by governments that are
often to the right of the
political spectrum.
Interest in Listian state-led developmentalism is a
exceptionally good example of the
conundrum that a number of anti-capitalists face. On one hand,
it is in Listian ideas,
and in particular, their application in places like Germany and
Japan that we see
perhaps the strongest alternative to neoliberal prescriptions
for growth and
development. Moreover, Lists critique of the political use of
free trade agendas by
the strong chimes with current understandings of the promotion
of neoliberalism as a
deliberate tactic by the powerful core states in the west to
protect and promote their
interests.
But on the other hand, List was above everything else a
nationalist and not an
internationalist. A nationalist who was committed to doing what
he thought was best
for what was to become modern Germany. Even though he cannot be
blamed for what
became of his ideas when put into practice in Germany, he was
committed to the
creation of a strong army and a strong states to defend the
national interests in a
hostile international environment. Moreover the national project
was the end, and the
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mobilisation of the people a means to that end. For Marx, List
was a true German
philistine 18 who (at best) misunderstood Ricardo and the nature
of labour:
Friedrich List has never been able to grasp the difference
between labour as a
producer of something useful, a use-value, and labour as a
producer of
exchange-value, a specific social form of wealth (since his mind
being
occupied with practical matters was not concerned with
understanding)19
In short, the concentration on the nation resulted in workers
being perceived of as
units of production to be deployed and mobilised to provide
surplus for the (German)
bourgeoisie.
And it is not just in List himself that seekers for alternatives
find their beliefs
challenged. Where the ideas have been put into practice, this
has typically been by
authoritarian and even anti-democratic governments that organise
workers behind a
national project often if not typically trampling over workers
rights in the process.
The alternative to neoliberal capitalism, then, appears to
entail the use and abuse of
the workers as a means of national generation both in (Listian)
theory and in practice.
In at least two cases (Germany and Japan), these developmental
states have
destabilised regional security and ultimately contributed to
global warfare not
exactly the sort of regime supported by the left. Or as Ben
Selwyn puts it in a recent
article that explores the beliefs of adherents to Listian
economics in more detail,
18 Karl Marx (1845) Unpublished Article on Friedrich Lists book:
Das Nationale System derPolitischen Oekonomie available at
http://www.marxists.org/archive/marx/works/1845/03/list.htm19 Karl
Marx (1859) Critique of Political Economy: Part I: The Commodity,
footnote 8.
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There is, consequently, a disjuncture between the political
regimes that neo-
Listians aspire to (democratic and liberal) and those they
assert are required
for high-speed catch-up development (authoritarian)20
In the following section, the analysis focuses on Lists critique
of Smith, the use of
free trade as a political tool, and the origins of his statist
response. The paper will
return to the relationship between authoritarianism and
(state-led) development in the
concluding section.
The Political Economy of Friedrich List
If you search for mercantilism on google (or any other source)
it is common to find
List included as a classic example of a mercantilist thinker.
But in many respects, this
is a miscasting of his position. List did not want to return to
the mercantilism that
Adam Smith had attacked in The Wealth of Nations. In the preface
to The
National System of Political Economy (1841), he responds to
accusations that he is
trying to revive mercantilism by arguing that
those who read my book will see that I have adopted in my theory
merely the
valuable parts of that much-decried system, whilst I have
rejected what is false
in it; that I have advocated those valuable parts on totally
different grounds
from those urged by the (so-called) mercantile school, namely,
on the grounds
of history and of nature
Indeed, though much of his work specifically focuses on what he
sees to be the
problems with Smith, he was in many ways an admirer. Smith,
after all, had been the
20 Ben Selwyn (2009) An Historical Materialist Appraisal of
Friedrich List and his Modern-DayFollowers, New Political Economy,
14 (2):165.
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first person to undertake a comprehensive study of this kind and
was the originator of
the science of political economy. Rather than simply reject
Smith, he wanted to build
on his ideas and take them further and in particular politicise
what he thought was a
purely economistic approach that was not informed by the
concrete political realities
of the actual world. Mathematic theories require simplicity to
work and in the case of
Smith require a cosmopolitical perspective where individuals act
within a single
global economic entity.
For List this was all well and good in theory, but the reality
of the actual world was
rather different. In the real world, economies are national and
governments must
decide what is best for the nation in competition with other
rival national political
economies and what is best for the nation might not be what is
best for individuals.
Thus, for example, if the nation as a whole benefitted from the
development of a canal
system to build a national infrastructure, then this should be
promoted (and funded)
by the state even though the interests of some (for example,
waggoners) would be
harmed by this development. Quite simply the interests of the
individual were less
important than those of the nation, and the government had to
intervene to guide and
lead based on long term national interests - though not
intervene in daily economis as
over regulation was also seen as a problem for List. The key was
strategic
intervention.
For List, Smith had paid too much attention to exchange in his
cosmopolitical world,
and not enough to production. But in thinking about production,
he went further than
the mercantilist emphasis on natural capital (land, sea, rivers,
mineral resources and
so on) and included material capital (machines, tools and so on
used in the
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production process) and mental capital which included skills,
training, and
enterprise as well as the more traditional tools of state power
(armies, naval power,
and so on).21 A key role for governments was to consider what
would create wealth in
the future how to support and promote scientific discoveries,
advances in
technology, improvements in transport, the provision of
educational facilities and so
on. It also entailed governments provided the environment within
which these
advancements could occur most clearly through the maintenance of
law and order.
All other things being equal, the more time and money that any
government devotes
to mental capital, then the more successful the nation will be
in the long run.
Free trade as tool of political power
But it is not just in developing national strength that
economics was political. For List,
the promotion of free trade was political in itself. For List,
the English were the
greatest bullies and good-for-nothing characters in Europe.22
Their supremacy as an
industrial power put Britain in a position to exploit its
comparative advantage through
the promotion of free trade with those states/entities23 that
could not compete under
free trade conditions. But where Britain did not have a
comparative advantage it
through away its laissez-faire ideology and instead resorted to
high tariffs to defend
domestic producers. As a result, German states had been unable
to move forward and
compete with the dominant powers. With the exception of
Prussia
all the rest of Germany had for centuries been under the
influence of free
tradethat is to say, the whole world was free to export
manufactured
21 David Levi-Faur (1997), Friedrich List and the Political
Economy of the Nation-State, Review ofInternational Political
Economy, 4 (1), pp. 15478.22 Note that List always referred to
England and the English rather than Britain or the British
eventhough much of the theory and practice of free trade took place
in and via Scotland. Friedrich List(1841) The National System of
Political Economy: Fourth Book, The Politics, Chapter 33, available
athttp://www.efm.bris.ac.uk/het/list/list423 Bearing in mind that
the process of state formation in Europe was still unfolding.
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products into Germany, while no one consented to admit
German
manufactured goods into other countries.24
As a result, there was little to no evidence of the benefits of
free trade as a means of
promoting development
It cannot, however, be asserted that the predictions and the
promises of the
school about the great benefits of free trade have been verified
by the
experience of this country, for everywhere the movement was
rather
retrograde than progressive. Cities like Augsburg, Nrnberg,
Mayence,
Cologne, &c., numbered no more than a third or a fourth part
of their former
population, and wars were often wished for merely for the sake
of getting rid
of a valueless surplus of produce.25
Rather, it was the lack of free trade that seemed to be most
beneficial to German
producers most notably during the Napoleonic Continental System
where a
European blockade of British imports26 created a space for
domestic industries to
grow where British imports had previously dominated. Though the
end of the
continental system in 1812-13 brought back a flood of cheap
British goods into
Europe, List was convinced about the benefits of a large
internal unified market
protected from more powerful competitors (and also convinced
about the importance
of a strong army and in particular a strong navy to support
economic interests through
military force).27
24 First Book, Chapter Seven.25 Ibid.26 Originally those
territories under Napoleonic rule in 1806 but extended through the
Treaty of Tilsitto Russia in 1807. The blockade included goods from
the British colonies that had transited throughBritain.27 List was
also a proponent of strategic political and military alliances to
counter the hegemon andpotential future hegemons. Initially
focussing on England he later came rather prophetically to
seeRussia and the USA as emerging forces, and even called for an
Anglo-German alliance as acountervailing bloc.
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Thus, the evidence pointed to the importance of protecting
infant industries and the
state led promotion of industrial innovation, transport and
infrastructure, education
and so on. The state also should provide stability and legality,
and also invest in those
harder military sources of power such (essentially armies). But
this was not a rejection
of trade per se. Rather, it was the promotion of delinking until
the nation was able to
compete on an equal footing with existing powers or even better,
to compete from a
position of strength.
List and the American System: The First Washington Consensus
In addition to being a theorist, List was also politically
active as a proponent of a
unified German state. List was imprisoned and then exiled for
his political views
(under the guise of corruption) in 1825, and it was in the USA
that he found new
evidence to support his emerging ideas. List was particularly
impressed by the
American System promoted by John Quincy Adams and Henry Clay.
This system
entailed the creation of a national bank and sovereign credit to
enable the government
to guide development; the active promotion of agriculture,
industry and science to
integrate or harmonize them into a single economic structure;
continental
integration through government funded infrastructure
developments; and high public
land prices and external tariffs (notably the Abominable Tariff
of 1828) to raise
income for government projects and also to protect domestic
producers from
competition form more developed states.
Moreover, the proponents of the American System shared the same
view of the
inequity of supposedly free trade and the importance of
maintaining national political
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20
perspectives in a competitive system of rival national states.
The following quote is
from Henry Clays defence of the American System which had in his
words created
an existing state of unparalleled prosperity after proposals to
replace it with a less
protectionist policy in 1832. it is rather long, but worth
repeating here as it has
salience for contemporary debates over free trade and the
neoliberal agenda:
When gentlemen have succeeded in their design of an immediate or
gradual
destruction of the American System, what is their substitute?
Free trade! Free
trade! The call for free trade, is as unavailing as the cry of a
spoiled child, in
its nurses arms, for the moon or the stars that glitter in the
firmament of
heaven. It never has existed; it never will exist..Gentlemen
deceive
themselves. It is not free trade that they are recommending to
our acceptance.
It is, in effect, the British colonial system that we are
invited to adopt; and, if
their policy prevail, it will lead substantially to the
recolonization of these
states, under the commercial dominion of Great Britain.28
For Clay, the whole basis of taxation in the USA from 4 July
1789 apart from paying
the debts incurred in wars was, in the words of the second ever
statute of the USA is
for the encouragement and protection of manufactures (emphasis
added to original
by Clay).29
In the heading above I refer to the American system as the first
Washington
Consensus. This takes liberties with the definition of consensus
as Clay and Adams
faced constant criticisms from proponents of free trade. Yet
within a very short period
of time, this state-led American System transformed the country
in the words of the
preamble to Clays three day defence of the system on the US
Senate Website:
28 Henry Clay (1831) The American System in Wendy Wolff (ed) The
Senate 1789-1989: ClassicSpeeches 1830 - 1993 Vol III (Washington:
US Government Printing Office): 91.29 Ibid: 86.
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21
Henry Clay's "American System," devised in the burst of
nationalism that
followed the War of 1812, remains one of the most historically
significant
examples of a government-sponsored program to harmonize and
balance the
nation's agriculture, commerce, and industry30
Although he had a clear political purpose in lauding his own
successes, Clays
summary of the achievements of the American System are
impressive. Again, the
quote is rather long, but as the speech was delivered over three
days in Senate, then it
seems quite apt to reproduce a long section of it here:
We behold cultivation extended, the arts flourishing, the face
of the country
improved, our people fully and profitably employed, and the
public
countenance exhibiting tranquillity, contentment and happiness.
And, if we
descend into particulars, we have the agreeable contemplation of
a people out
of debt; land rising slowly in value, but in a secure and
salutary degree; a
ready though not extravagant market for all the surplus
production of our
industry; innumerable flocks and herds browsing and gambolling
on ten
thousand hills and plains, covered with rich and verdant
grasses; our cities
expanded, and whole villages springing up, as it were, by
enchantment; our
exports and imports increased and increasing; our tonnage,
foreign and
coastwise, swelling an fully occupied; the rivers of our
interior animated by
the perpetual thunder and lightening of countless steamboats;
the currency
sound and abundant; the public debt of two wars nearly redeemed;
and to
crown it all, the public treasury overflowing, embarrassing
Congress, not to
30
http://www.senate.gov/artandhistory/history/common/generic/Speeches_ClayAmericanSystem.htm
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22
find objects of taxation, but to select the objects which shall
be liberated of the
impost.31
Notably, while the American system overlapped with the
establishment of the
Zollverein, the German customs union advocated by List and
others that did much to
lay the foundation of the modern unified German state, it
preceded the
implementation of Lists programme in a more systematic manner
under Bismark by
the best part of half a century. So we might suggest, then, that
the USA was the first
Capitalist Developmental State. And just as the nascent American
System played a
key role in aiding development in the USA, so the Bismarkian
project propelled
Germany to centrality in Europe. This success subsequently
influenced the ideas of
Toshimichi Okubo, who placed learning from Germany at the heart
of the
renaissance of the post-Meiji Japanese economy (beyond his own
truncated political
career).32
While somewhat modified by the experiences of the second world
war and indeed the
aftermath of the war, these ideas were again to play some part
in influencing Japanese
development from the 1960s, and subsequently the capitalist
developmental states in
East Asia in the 1970s and 80s.33 Here, of course, state led
development and
protectionism was much aided by the geostrategic context of the
Cold War which
meant that the USA not only tolerated protectionism and state
led development in
Taiwan and South Korea, but largely funded it; partly through
aid and military
31 Clay The American System op cit: 83-4.32 Iwata Masukazu
(1964) Okubo Toshimichi: The Bismarck of Japan (Berkeley:
University ofCalifornia Press).33 It might also be worth mentioning
here that at various stages of the post WWII era, both the
NorthKorean and Romanian economies were the fastest growing in the
world and that the reconstruction ofEurope owed more to planning
than free markets.
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23
protection, and partly through allowing unprecedented access to
the US market
without seeking reciprocal market access and
liberalisation.34
And the end of the Cold War helped the shift from geostrategic
to a geo-economic
agendas in shaping the nature of many sets of international
relations in particular
(but not only) relations with the United States. The collapse of
communist party rule
across Europe also did much to undermine arguments for statist
economic structures,
and the transition from socialism in places like China gave
further evidence to those
who were seeking it that getting the market fundamentals right
was the only way
forward.
Towards Alternative Post-Crisis Modes of Governance
Having revisited, albeit it very briefly, these experiences of
strong state led
development, it is difficult to understand exactly why the
Washington Consensus has
become so dominant as a development model in the recent era. It
might be fair to
point out that state led development might have its limits
either the listian capitalist
developmental state or indeed perhaps the socialist planning
version of state led
development. Indeed, List thought that it should indeed have its
limits. And we can
and indeed should debate the extent to which this development
can occur without
treating workers as cheap components in the unit of production
to be mobilised
manipulated and frequently be oppressed in the name of the
national project. But as a
prescription for initial industrialisation, for national
construction (or reconstruction),
and what Clay called the harmonisation of the national economy
for example,
balancing agricultural and industrial development and for
planning for the future
34 Bruce Cumings (1984) The Origins and Development of the
Northeast Asia Political Economy:Industrial Sectors, Product Cycles
and Political Consequences, International Organization, 38 Winter:1
22.
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24
through investment in mental capital, then strong state-led
development seems to
have much more to offer than the dominant orthodoxy
suggests.
In searching for why this is the case, List gives us two
possible suggestions. First, the
scientific nature of the project and the separation of economics
and political
economy as two distinct and separate spheres of analysis.
Mathematical based
economic theories, as List argued, require simplicity and
understandings about the
nature of knowledge, rationality and decision makings that
assume away the messy
complexity of real political life. In short, they only work when
politics is discounted
which is a bit of a problem when it comes to transferring theory
to actuality.
Second, its difficult not to return to Lists idea of the
promotion of free trade as a tool
in the promotion of the national interest by the strong. On one
level, we see the
promotion of an extent of liberalisation overseas that is not
countenanced for political
reasons at home; to quote Clay one last time freedom on one side
and restrictions,
prohibitions, and exclusions, on the other.35 On another, there
is the idea that the
already rich are trying to deny later developers the ability to
do the same as they once
did themselves the idea that first Britain and later others kick
away the ladder
after they have used it to stop others following suit.36
So we have a situation where the neoliberal model apparently not
only failed to result
in the expected development in the south, but also resulting in
a catastrophic crisis in
the north. Moreover, this crisis might well have been even worse
if governments had
not decided to put their neoliberal principles aside to first
bail out failing companies
35 Clay The American System op cit: 91.36 Selwyn An Historical
Materialist Appraisal: 159, and Ha-Joon Chang (2002) Kicking away
theladder? Economic Development in Historical Perspective (London:
Anthem).
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25
and banks and second to pump enormous quantities of tax payers
money and national
debt to prevent total collapse and to spur recovery.
We should acknowledge that the response to at least part of the
Listian critique is not
more of the state but less of it. As the Monterrey Consensus
argued, the advanced
economies need to practice what they preach and open their
markets so that there is
full and effective free trade rather than the partial freedoms
that characterises the
current global trading order. And this solution might entail an
even stronger role for
the global financial institutions than before the crisis
particularly a (re-constituted
and reformed) WTO. It strikes me as somewhat ironic that the
ultimate logical
conclusion of the complaints of at least some anti-capitalist
demonstrators who
bemoan the duplicity and protectionism of the US and the EU is
actually more and
freer liberalisation rather than less of it.
But if we assume for a moment that the messy real world of
politics will make such a
transformation somewhat unlikely (and I'm aware that I am
discounting here in the
same way that I have accused others of so doing), is there a
change in the dominant
orthodoxy in the offing? And if there is, might this new
orthodoxy become influenced
by a Chinese mode or model of development and governance?
Plus a change .
First, we have to acknowledge that thee are strong arguments to
suggest that nothing
much will change or at least that things will change but the
fundamental dominance
of capitalism (if not neoliberalism) will remain in place. In
the UK at least, those who
failed to prevent or even see the crisis in the first place have
been involved in a
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26
concerted attempt to restore themselves and their reputation.
This quote from a speech
by the FSAs Jon Pain is typical of the type:
Much of our early effort was focused on restoring confidence in
the financial
system, rocked to its foundations by what, in retrospect, were
serious mistakes
by financial institutions, governments, central banks and
regulators, including
the FSA. We have subsequently played a leading role in helping
shape the
debate (through the Turner Review) on how the regulatory
framework should
be strengthened, and in some areas rebuilt, to avoid the
likelihood of this
financial crisis ever reoccurring. But though confidence is
vital to the banking
system, as a whole we needed to do more. we have strengthened
both
specific institutions and the financial system as a whole,
through bank
recapitalisation and asset-protection schemes. And critical to
the effective
operation of the markets has been the additional central bank
and Treasury
funding schemes37
In short, there is nothing fundamentally wrong with the system.
In the short term,
those in danger of collapse need to be bailed out by government
intervention, but in
the long term market fundamentals should be fully restored but
this time with the
instruments of regulation working properly (the same message
that followed previous
bank failures and mini crises.
Capitalism needs to be both facilitated and legitimated by
government action. In large
parts of the world, for a decade at least, the dictates of
neo-liberalism placed an
emphasis on governments undertaking liberalisation and
deregulation the process of
facilitating. Now, with neo-liberalism challenged (to say the
least), the task turns to
37 Jon Pain (2009) Mortgage Market Review and Regulation of
Secured Lending 1 July 2009available at
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0701_jp.shtml
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27
legitimation. Or put another way, there is a need to prevent a
crisis in capitalism
becoming a crisis of capitalism.
This might entail legitimating capitalism by re-writing the
rules of the global
economy at the global level reforming the IMF, finding agreement
at the WTO, ad
hoc agreements at the G20 and so on. It will also play out at
the national level, with
different governments striving to show how they are defending
the national interest in
the face of global economic turmoil. And rejecting global
neo-liberalism can actually
legitimate domestic alternative forms of capitalism forms that
might be more
regulated, which might have a greater role for the state and
state owned enterprises,
and that might promote the expansion of health education and
welfare for the workers.
But economic forms that are nevertheless designed to generate,
appropriate and
distribute surplus to the bourgeoisie.
Towards a Chinese mode of governance?
It might also be the case that national forms of capitalism are
increasingly influenced
by the Chinese experience that we might move towards a Chinese
mode of
governance. I am not referring here to an increased Chinese
influence in existing
global institutions and/or emerging alternative forms of global
regulation and
interaction. In many respects, like the UN, the power structure
of the Bretton Woods
institutions reflects the balance of global power in 1944 more
than the structure of
today, and the case for an increased Chinese influence at this
global level seems
inarguable (and also for other emerging powers and those that
are being asked to
take an increasing role in funding the global institutions).
Neither am I referring here
to the promotion of a different Chinese mode of international
relations (though this
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28
does play some role as should become clear shortly). Rather, the
focus here is simply
on the ideational appeal of a Chinese model for other (later)
developing states.
Is there a Chinese model?
Whether there really is something we can call a Chinese model is
debatable. Is there
something that we can characterise simply as the key elements of
this model,
something that is distinctly Chinese, and something that is
transferable to other
settings? Indeed, is there something that SHOULD be transferred?
The truthful
answer is that I am not sure yet to be convinced one way or the
other and am
interested to hear the views of others at this forum. But on
balance I probably think
that the idea of a model perhaps goes a tad too far. Thus,
building on discussions with
Zhang Xiaomin, I prefer the translation of in this context as
mode rather than
model, and thus the idea of a Chinese mode of governance rather
than a Chinese
model38 or the concept of a popularised by Ramo.39
Firstly, then, the problems in identifying the constituent
elements model. Part of the
problem here is the diversity within China itself. To talk of a
single Chinese model
misses the huge variety the different models of economic
structures within China
itself. The political economy of Zhejiang where small scale
private industry
dominated (until recently at least) within a strong political
climate is rather different
from the more mercantile political economies of Chongqing and
Shanxi, which are
different again from the Marxist-Maoist social norms of Henan.40
Notably, even areas
38 Email discussions with Zhang Xiaoming. See also Luo Jianbo
and Zhang Xiaomin (2009) ChinasAfrican Policy and its Soft Power,
AntePodium,http://www.victoria.ac.nz/atp/articles/ArticlesWord/JianboXiaomin-2009.doc.39
Joshua Ramo (2004) The Beijing Consensus Notes on the New Physics
of Chinese Power (London:FPC).40 I am grateful to Wang Zhengyi for
these comments and ideas.
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29
that on the face of it seem very similar have adopted remarkably
different
development/growth strategies as shown by Linda Li in her study
of Shanghai and
Guangdong,41 and more recently by John Donaldsons study of
Yunnan and
Guizhou.42
But perhaps this diversity itself is part and parcel of this
mode of governance. For Yao
Yang, getting the balance right between centre and provinces
particularly in the
distribution of finances since 1994 is an essential components
of the China model.
He also points to the significance of pragmatism in policy
formation and
above all else, the Chinese experiment seems to be just that an
experiment. For most
observers, it is this experimentation and non ideological
(perhaps even de-
ideologised) commitment to doing whatever it takes to promote
growth whilst
maintaining political stability that is the defining hallmark of
the Chinese mode of
governance. Perhaps best defined by Heilman:
The key to understanding the adaptability of Chinas political
economy over
the last few decades lies in the unusual combination of
extensive policy
experimentation with long-term policy prioritization43
Wang Shaoguang similarly argues that the lack of a single way of
doing things in
individual areas is one of the key strengths of policy reform in
China; not just in the
current era, but under Mao as well. But the key difference now
from the Mao era is
41 Linda Li (1998) Centre and Provinces: China 1978-1993: Power
As Non-Zero-Sum Game (Oxford:OUP).42 John Donaldson (2009) Why do
Similar Areas Adopt Different Developmental Strategies? A studyof
two puzzling Chinese provinces Journal of Contemporary China,18
(60): 421-44443 Sebastian Heilmann (2009) Maximum Tinkering under
Uncertainty: Unorthodox Lessons fromChina, Modern China, 35 (4):
450. See also Sebastian Heilmann (2008) Policy Experimentation
inChinas Economic Rise, Studies of Comparative and International
Development, 43 (1): 1-26.
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30
the much more open and plural political system that allows a
variety of different
voices and is unrestrained by being politically correct.44
Crucially, these experiments have taken place under regime
continuity45 but for
Yao Yang a regime that has lost its previous ideological raison
dtre and become a
disinterested government ().46 By disinterested. Yao Yang means
a
government that is not influenced by representing narrow
sections of society, as is the
case in populist regimes, but instead takes the long term
perspective of what is best
for the country.
This state led experimentation (or devolved state led
experimentation) fits in with the
perhaps more dominant and long-standing idea of the Chinese
experience as
characterised by gradualism. As Sun Liping argues, what this
actually means in
practice is open to debate, but what is clear is that this
gradualism stands in stark
contrast to the shock therapy47 than was not only the prescribed
policy of choice of
the global neoliberal institutions, but also the main modus
operandi in the transition
from socialism elsewhere.
And crucially, this gradualism means that state remains a
powerful force within the
domestic political economy, not only protecting key sectors and
potentially vulnerable
44 Shaoguang Wang (2009) Adapting by Learning: The Evolution of
China's Rural Health CareFinancing Modern China 35 (4) 370-404.45
Sun Liping (2008) Societal Transition 88-113.46 The fourth element
is a new road to democratisation. See Yao Yang (2008)
? Tianyi jiangtang, Ningbo Library, March 8, available at
www.ccer.pku.edu.cn/download/8912-1.doc. The translation of as
disinterested is Yao
Yangs own preferred translation in private email communication
with the author.47 Sun Liping (2008) Societal Transition: New
Issues in the Field of the Sociology of DevelopmentModern China, 34
(1): 106-7.
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31
producers but promoting key national projects including the
outward promotion of
Chinese economic interests under the banner of. And perhaps
another broad
characteristic of the Chinese mode is a managed process of
re-engagement with the
global economy or a state-led engagement of globalisation with a
nationalist tinge.48
In economic terms, then, we see relatively strong state control
and/or national
ownership of key sectors and direct global interactions to serve
the perceived
national interest; or globalising on your own terms rather than
somebody elses.49
China as Model or China as Metaphor
The extent to which this is a Chinese mode rather than a Chinese
variant of existing
strong state models is open to question. Much of the debate over
the nature (or
existence) of a Chinese model seems to stress the importance of
the uniqueness of the
Chinese experience. if there is a model, it is one that by
definition is not
transferable or not something that can be transplanted wholesale
from the Chinese
context to other developing states. Rather the single most
important lesson that China
provides for other developing states is start from national
conditions, take your own
road.50
Indeed, one of the major criticisms of neoliberalism and the
Washington Consensus is
the attempt to impose a one size fits all solution on countries
with different
structures and systems and different needs. Shen Li and Bai
Shunying argue that
although developed nations are all market economies the nature
of these market
economies are not identical they emerged in different ways
because of the different
48 Tian Yu Cao (2005) Conclusion: The Theory and Practice of the
Chinese Model in Tan Yu Cao(ed) The Chinese Model of Modern
Development (London: Routledge): 303.49 I am grateful to Greg
Felker for discussions that clarified the nature of this attraction
and its
difference from other sources of soft power.50 Shen Li and Bai
Qunying (2006) Analysis of Chinas Economic Model (jiedu zhongguo
jingji
moshi Guangming Ribao, 15 May 2006
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32
conditions and resources of each nation; for example, the
evolution of German and
Japanese capitalism and market economies being very different
from the American
experience. Diversity is right and natural the attempt to impose
uniformity and
indiscriminately copy another countrys model is the problem. For
example, the
Latin American economic crisis has its roots in the emulation of
the Washington
Consensus model of free-market capitalism, rather than seeking
development
trajectories that suited the concrete circumstances of each
Latin American state.51
But while the Chinese experience is clearly unique, drawing from
a specific and
particular set of circumstances, is it uniquely unique? The
similarity to the
authoritarian economic growth that occurred in other parts of
Asia in previous
decades led Peerenboom to call his chapter on the Chinese
developmental model,
Dj vu all over again.52 In taking apart what he called the myth
of the Beijing
Consensus, Scott Kennedy argues that:
the intellectual source for most of Chinas economic reforms has
been the
experiences of other countries, and Chinas experts and officials
have closely
examined and borrowed from elsewhere. Ramo would have been
closer to the
mark if he said China was following in the footsteps of other
developmental
states53
The idea of the relative state autonomy of bureaucrats in
developmental states in
East Asia also sounds rather similar to the idea of a pragmatic
and disinterested
51 Ibid.52 Randall Peerenboom (2008) China Modernizes: Threat to
the West or Model for the Rest? (Oxford:OUP).53 Scott Kennedy
(2008) The Myth of the Beijing Consensus Prepared for the
conference,Washington Consensus Versus Beijing Consensus:
Sustainability of Chinas DevelopmentModel, National Taiwan
University Center for China Studies and University of Denver Center
forChina-US Cooperation, Denver, Colorado, May 30- 31,
2008.http://www.indiana.edu/~rccpb/Myth%20Paper%20May%2008.pdf:
14
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33
government doing what is best for the country in the long term;
indeed, it sounds
rather similar to Lists argument about the role of governments
imposing national
economic interests over those of individuals.
To be sure, there are many differences. The level of direct
state control is probably
stronger in China today than it was in South Korea for example,
where the chaebols
created an extra level or layer of authority between state and
market. History matters,
and Chinas history is obviously its own and by definition
unique. The global context
is also important and much changed from the Cold War for
example. And of course
the sheer size and scale of China marks it out as being
different from anything we
have seen before.
Nevertheless, I suggest that the specifics of what has happened
in China and how it
differs from previous (or even contemporaneous) strong state
developmentalism is in
many ways irrelevant. To be sure, there are things that can be
learned from studying
the specifics of the Chinese case, and indeed, there are now
increased mechanisms for
studying the Chinese way that might in the long run make the
Chinese experience
more of a model that can be implemented elsewhere.54 Equally
unimportant are the
problems that China now faces as a result of the push for growth
to date;
environmental issues, inequality, corruption, unbalanced
development and so on (an
issue we will return to in the conclusion).
In many respects, these nuances are less important than the
reality that others
construct for their own purpose the ideal image of China as
alternative for those
54 Luo and Zhang Chinas African Policy op cit.
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34
who want it to fulfil a specific role in (often domestic)
political discourses,
irrespective of what that Chinese alternative actually is. And
there are perhaps three
different levels of the importance of China as alternative
here.
The first level is the idea of China as metaphor for rapid
economic growth without
political liberalisation. Here, the economic context is less
important than the
maintenance of single party rule, and this is particularly
salient in those parts of the
world where authoritarian regimes are under pressure to not only
economically, but
also politically liberalise. The second is China as actual
alternative China as an
alternative economic partner that is happy to deal with other
countries with no
democratising strings attached. Here, what China is or might be
is less important than
the space it gives others through being an alternative source of
investment and/or an
alternative market to develop their own indigenous strategies
free from the imposition
of liberalising conditionalities by the dominant Western powers.
Of course, active
Chinese policy helps in the promotion of the idea of China as
alternative here
through the cancelling of debt, through the treatment of African
states as partners and
through the promotion of the idea of China as a different type
of international actor to
those in the West. If you like, when compared to the activities
and objectives of the
European colonial powers, and the later activities of the US
(and the SU during the
Cold War), China is an uber-responsible great power. But in
general, what makes
the Chinese option attractive is not so much a Chinese model but
the lack of
projection of any model.
The third level is the simple idea of China doing things its own
way and not adhering
to neoliberal prescriptions is enough in itself. It shows others
that you can do things
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35
your own way and achieve great successes its not necessarily the
model that is
important here but the above mentioned argument that each
country should do what
works best for it. As such, it doesnt matter what the Beijing
Consensus or the
Chinese Model contain in detail as the terms are more potent as
metaphors for the
idea that there is an alternative to the western way of doing
things and western
preferences. The simple vision of China as an independent rising
power is important
in itself55. But more important, the economic success of Chinas
strategy has
relegitimised the state as a critical actor.56 What specifically
the state has done, then,
is perhaps less important than the fact that the state led
project in China seems to have
been so successful. In the wake of the delegitimisation of
state-led development in the
wake of the Asian financial crisis and the decline of communist
party rule in most
parts of the world, China refocuses our attention on alternative
modes of growth (if
not development).
What China is, and what China might be
The promotion of the idea of China as different seems partly to
be inspired by an
attempt to show how existing theories and approaches to politics
and international
relations simply cannot predict how China will behave as a
rising power. Such a
project inevitably entails the creation and depiction of the
other that China is
different from. Thus, a form of Occidentalism appears to be
occurring where the West
becomes the benchmark of everything that China is not.
55 Jennifer Cooke (2009) Chinas Soft Power in Africa in Carola
McGiffert Chinese Soft Power andits Implications for the United
States: Competition and Cooperation in the Developing
World(Washington DC: Center for Strategic and International
Studies): 27-4456 Eva Paus, Penelope Prime and Jon Western (2009)
China Rising: A Global Transformation? inEva Paus, Penelope Prime
and Jon Western (eds) Global Giant: Is China Changing the Rules of
theGame (Basingstoke: Palgrave): 17.
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36
Thus, we see the promotion of a China that is not seeking to
impose its world view on
others, and a power that thinks that each country is free to do
what it wants within its
own sovereign territory; and by explicitly promoting Chinas
position in opposition to
those who promote normative positions, this anti-normative
stance becomes
something of a normative position in itself. Its preferred world
order is one that allows
for plurality and democracy built on Chinas historical cultural
predilection for
harmony, virtue and society. Again, this world order is
deliberately promoted as being
the polar opposite of that favoured by the interventionist
unlateralist West with its
emphasis on materialistic individualistic goals.
The suggestion in this paper, is that Chinas economic mode at
least not only has
much in common with the basic fundamentals of developmental
statism in east Asia,
but also with the basis of original industrialisation and nation
building in Germany,
the USA and elsewhere. In this context, the surprise is not that
China has grown in the
way that it has; the real surprise is that neoliberalism came to
be so ideationally
dominant. As such, rather than focus on the specifics of the
Chinese example per se,
perhaps in the long run Chinas biggest impact in terms of
governance (domestic and
global) is to re-ignite the debate and refocus attention on
alternatives to the
Washington Consensus.
It is not my intention here to discuss the future in any detail
not least because it is
far too soon to know what the impact of the global crisis will
be on the long term
development trajectory in China. Evidence to date points to the
success of the
stimulation package and bank spending in spurring a rapid
recovery, but whether this
will be either sustainable and/or at the cost of longer term
distortions is as yet unclear
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(and un-provable). The need to move the balance from exports to
domestic
consumption as a source of growth seems more urgent but making
such a transition
also appears to be far from easy.
The desire to make such a transition predates the current global
crisis. Indeed, it is
interesting to note that external interest in the global
influence of the Chinese way
seems to have increased at the same time as some in China have
questioned its long
term sustainability and suitability. From the Autumn of 2004 in
particular, Chinas
leaders seem to have been pushing for new balances and
transitions to solve the
problems generated to date. In short, there has been an attempt
to move from a
growth driven to developmental paradigm aimed at dealing with
pressing
environmental issues and the growing strains on social stability
(not least the growth
of inequality and corruption).
After the 1997 financial crisis, I wrote a paper suggesting that
China was becoming
too dependent on foreign investment and external export markets
as a source of
growth, and that the pattern of growth needed to be restructured
and rebalanced to
place a greater emphasis on domestic consumption.57 The need for
such a re-
balancing was also part of this change in emphasis even before
the current crisis re-
affirmed the potential dangers of export led growth in a
volatile global economy.
What is more, the political model also seems to be in need of a
systematic change,
with Chinas leaders pushing for the party-state to re-engage
with the population,
getting rid of corruption, and ensuring that single party rule
serves the people
57 Shaun Breslin, The Politics of Chinese Trade and the Asian
Financial Crises: Questioning theWisdom of Export Led Growth in
Third World Quarterly 20 (6) Dec 1999: 1179-1199.
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(rather than just serving party-state officials and their
allies).58 The aim, then, is to
democratise single party rule with democracy defined here as
providing new ways for
interest articulation, and increasing accountability,
transparency and certainty through
the extension of fazhi .
So, like other state-led Listian projects before it, the Chinese
experience has not been
cost-free. In particular, the extent to which growth has been
built on the utilisation of
(cheap) labour as a means of production has been the source of
considerable debate.
And in some respects, perhaps the true test of the long term
appeal and applicability
of the Chinese experience will be whether the first stage of
developmentalism that
generated such impressive growth but also the myriad and well
documented
dysfunctional outcomes can be successfully transformed into a
second more
sustainable and more democratic developmental phase. If it can,
then the Chinese case
will certainly move into a new realm of agenda setting and even
more fundamentally
challenge the dominance of existing norms of governance than the
Listian Capitalist
Developmental Statism with Chinese characteristics has already
done to date.
Conclusions
The basic argument in this paper is that state led approaches to
development have
been much more influential than the dominant orthodoxy both
before and apparently
even after the global crisis would seem to suggest. Indeed, when
viewed through a
historical lens, what has happened recently in China has clear
parallels with actual
58 Shaun Breslin, China: Democratising One Party Rule?, Fundacin
para las RelacionesInternacionales y el Dilogo Exterior Working
Paper, September 2008. Available
athttp://www.fride.org/publication/486/china-democratising-one-party-rule
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39
experiences of development in Europe, the USA and East Asia (as
opposed to
theoretical prescriptions for development).
At best, then, the prescriptions of the Washington Consensus
seem to be ahistorical
and based on theoretical assumptions about the nature of
economic activity that
assume away or discount politics in the real world. At worst,
they seem to represent
an attempt to stop others emulating the experience of the first
(and later) generations
of developmental states, that did not themselves accede to the
principles of free trade
that they now espouse; and indeed, in many cases still do not
accede to. As such, the
neoliberal project can be seen as a misguided attempt to impose
theoretical clarity on
what does not exist in reality, and/or the dominance of economic
(mathematical)
models in contemporary debates. Or maybe the promotion of these
models is part of a
wider process of norm location designed to promote the interests
of some in the
developed world. And despite the tendency to nationalise the
debate in international
relations and talk of strong states and weak states etc, it is
important to acknowledge
that what the USA or the UK does is not in the interests of all
the people of those
states, but represents the interests of specific groups indeed,
dare we use the word
classes within those states.
From this perspective, what has happened in China does not seem
particularly
remarkable at all. Although we can argue over the specifics, the
Chinese experience
broadly conforms with a state led growth project that places the
national project at the
centre of policy, and which points to the importance of (in the
words of the second
statute of the USA) the encouragement and protection of economic
activity by a
strong state, using a central financial institution and a form
of (at least) soft planning
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as the means of national construction and economic development.
From such a
historical viewpoint, focussing in on the Chinese example is
important, but not
enough in itself as it gives only a partial view of
developmental processes that have
been at the heart of (initial) industrialisation strategies
since at least the 1820s (and in
the case of the UK, even earlier). But the focus on China is
entirely understandable
it is the most recent and in terms of GDP growth the most
successfully sustained
example of such state led development. As a result, perhaps the
most significant role
that China plays as the world rethinks modes of governance is
reminding us once
again of the success of alternatives to the neoliberal project.
That China is prepared
to engage other states in a way that is rather different from
Western states only serves
to enhance the idea of China as alternative a project that is
ably supported by the
concerted efforts of the Chinese state to promote itself as
different.
For those on the left in the west, the success of China can be
confusing. On the one
had, the extent and growth of inequality and environmental
degradation point to
generic problems of capital accumulation that are growth rather
than people
centred. The extent to which the Chinese miracle has been at
least in part built on
the mobilisation and utilisation of Chinese workers as part of
the (lower) cost of
production is also a factor that divides those who separate the
outcome (growth) and
the alternative (neoliberalism) from the way in which this
alternative is achieved. In
many respects, then, the task of identifying a real alternative
an alternative where
the working classes are not exploited as means to the end of
attaining other objectives
built on conceptions of the national interest are still hard to
identify.
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The Listian alternative might be preferable when compared to the
neoliberal
mainstream, but for a real and fundamental alternative to evolve
that does not treat
labour as part of production, then the focus on growth and
GDPism as a measure of
what constitutes success probably needs to be rethought. We
might reject the idea
of economics as individual in a cosmopolitical world and replace
it with real world
national/statist economics, but the next step is to recognise
the class basis and bias of
what List called the National System of Political Economy and
think instead of
radical alternatives that have people, not nations, at the core
of their analysis.